Federal Budget 2021: Foreign Aid

Federal Budget 2021: Foreign Aid

Canada talks an excellent game when it comes to foreign aid. Successive Canadian governments tout impressive-sounding new initiatives and brag about the country’s leadership on the world stage. Most recently, the Trudeau government has emphasized the importance of pandemic-related relief in low- and middle-income countries and Justin Trudeau himself has led the call for “equal global access to a COVID-19 vaccine.”

At first blush, the current government’s rhetoric on foreign aid seems to be backed by financial resources. For instance, in 2020, Canada’s official development assistance rose by 7.7 per cent over the previous year, reaching 0.3 per cent of gross national income, its highest proportion since 2012, including $350 million for COVID-related activities. The 2021 federal budget announced an additional $1.4 billion for international assistance over five years. A casual observer might be optimistic about the future of Canadian aid.

However, a closer examination of recent trends and the latest federal budget reveals a grimmer picture. Canada has been a global laggard in terms of aid generosity and the current boost will be insufficient to change that, especially since the increases are only temporary, focusing on the next two years.

The current pandemic has reversed years of development progress, in some cases a decade or more. According to World Bank figures, the global crisis had already pushed about one hundred million people into extreme poverty by the end of 2020, and that figure could increase to a staggering one billion in 2030. Canada may be able to talk about entering a post-pandemic phase by next year, but COVID’s impact on the developing world will endure much longer. The crisis calls for a sustained, decade-long re-engagement with international development, not a two-year temporary increase in funding.

Two characteristics are immediately apparent from the budget’s list of initiatives in the area of foreign aid. First, it prioritizes emergency aid over long-term assistance. Indeed, it allocates an extra $165 million for humanitarian assistance, but only for the current fiscal year, as well as $288 million to the Rohingya Crisis and $80 million to the Venezuelan Crisis over the next two to three years. This emphasis on emergency responses, while crucially important, demonstrates a preference for highly visible, telegenic “signature” activities over the more enduring medium- and long-term partnerships for sustainable development that will be essential for reducing and eventually eliminating poverty. It opts for quick fixes and Band-Aids over more challenging structural transformation.

Second, the budget’s other international assistance initiatives almost all involve transferring funds to large multilateral financial institutions, namely the World Bank, the International Monetary Fund and the African Development Bank, which provide loans to developing countries. Canada only recently began providing foreign aid loans, after abandoning the practice decades ago, and already in 2020 reimbursable contributions rose to 10 per cent of Canadian official development assistance. At a time when low- and medium-income countries are increasingly facing a new debt crisis, accelerated by COVID, reimbursable assistance — as opposed to grants — seems like a misplaced priority. Moreover, these multilateral initiatives all seek to advance the role of the private sector, whereas the current pandemic has laid bare the importance of state capacity, as much in the Global North as the Global South.

Missing from the contents of the budget document is any sign that the Canadian government wants to intensify its work with international partner countries, as well as with Canadian and local civil society organizations. Why does the government seem to prefer to support short-term emergency responses and to sign cheques for one-off contributions to international financial organizations?

Part of the answer may be a lack of trust in Global Affairs Canada’s ability to lead development efforts in partnership with civil society organizations. It is true that the Canadian government’s development capacities have declined, even before the Canadian International Development Agency was merged into what is now known as Global Affairs Canada (GAC). However, the hollowing-out of GAC’s capacity is the result of deliberate policies that began during the Conservative government of prime minister Stephen Harper, if not earlier. So far, the Liberals under Justin Trudeau seem disinclined to reverse the trend and reinvest in GAC’s human and financial resources.

The lack of substantial additional resources for foreign aid reflects a lack of political will.

Under Liberal prime minister Paul Martin, Canada committed to doubling foreign aid to Africa between 2005 and 2008, a promise that was met by the Conservative government of Stephen Harper, although the latter subsequently enacted budget cuts. The Trudeau Liberals never committed to restoring it to previous levels, let alone aspired to significant increases. In 2016, they said allocating 0.7 per cent of Canada’s GDP for international assistance — the UN’s stated goal — was “an unrealistic near-term objective in the current fiscal context.” However, in the past year, they have managed to mobilize hundreds of billions of dollars for the domestic COVID response. The lack of substantial additional resources for foreign aid reflects a lack of political will, not the impossibility of finding a few extra billion dollars.

Moreover, the paltry commitment to foreign aid in the federal budget undermines the Liberal government’s own Feminist International Assistance Policy (FIAP), adopted in 2017. Funding has always been the FIAP’s Achilles heel, hampering its ability to translate bold language on gender equality and women’s rights into action on the ground. The budget doesn’t provide significant new resources to advance these priorities, and much of the money it is spending is going to international financial institutions that do not take FIAP into account in their work.

In sum, the budget gives only a temporary boost to Canadian foreign aid, despite a need for serious re-engagement in the world that has been made all the more urgent by the enduring COVID-related development crisis. It favours short-term emergency assistance over long-term poverty reduction, emphasizes loans rather than grants and deepening partnerships, and places great emphasis on the role of the private sector and multilateral agencies whose activities may not align with the government’s own Feminist International Assistance Policy.

It seems like the government would rather make one-off contributions to emergency appeals and international financial organizations than invest in and trust Global Affairs Canada to spend it wisely through sustained partnerships and longer-term programs that would not only reduce poverty but also promote structural changes to eventually eliminate it. Does the Canadian government, in spite of its rhetorical support, not really believe in the importance of international development? Its latest budget certainly bodes poorly for the future of Canadian foreign aid and of Canada’s engagement in the urgent, crucial, shared challenge of global development.

This article was first published on Open Canada


Stephen Brown
Stephen Brown

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